U.S. jobless claims drop 5,000 to 330,000

New applications remain at five-year low; seasonal quirk?

WASHINGTON (MarketWatch) — The number of people who applied for new U.S. jobless benefits fell again last week and remained at a five-year low, though it’s unclear whether the decline reflects improved hiring or dwindling layoffs.

Initial applications for U.S. unemployment benefits fell by 5,000 to a seasonally adjusted 330,000 in the week ended Jan. 19, the Labor Department said Thursday. That’s the lowest level since January 2008, one month into the 2007-2009 recession.

The Labor Department said estimates were used for three states that did not file complete information on time, including California and Virginia. The numbers for California, the most populous state, could help explain the drop in claims if the estimate turns out to be inaccurate.

The claims figures can be erratic in January after the end of the holiday season because of seasonal layoffs in sectors such as retail or construction, which usually spike in the first month of the year.

It will take another few weeks to see if the number of people filing new claims remains at their current lows, but there’s little evidence in other economic data to suggest that the labor market has dramatically improved.

“The claims data have tended to be more volatile than usual around this time of year,” said Jim O’Sullivan, chief economist of High Frequency Economics. “That history makes us wary about extrapolating from the past two weeks.”

Still, the lower-than-expected reading on claims helped boost U.S. stocks in Thursday action.

Economists surveyed by MarketWatch had expected claims — a rough gauge of layoffs — to climb to 360,000 last week. Initial claims from two weeks ago were unrevised at 335,000, Labor said.

Before the sharp decline in the past few weeks, initial claims had hovered around 360,000 to 370,000 since the end of last summer. The level of claims dovetailed with a labor market that has been adding an average of 153,000 jobs a month since the beginning of 2011.

The average of new claims over the past month, meanwhile, fell by 8,250 to 351,750, the lowest level since March 2008. The four-week average reduces seasonal volatility in the weekly data and is seen as a more accurate barometer of labor-market trends.

Also, Labor said continuing claims decreased by 71,000 to a seasonally adjusted 3.16 million in the week ended Jan. 12. Continuing claims reflect the number of people already receiving benefits.

About 5.66 million people received some kind of state or federal benefit in the week ended Jan. 5, down 214,076 from the prior week. Total claims are reported with a two-week lag.

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